What Is Entrepreneurship and How It Works
When it comes to changing the world, your voice can be a very powerful tool. Now channel that into the practice of entrepreneurship and you’re on the way toward building something tangible that could improve lives, communities and even shift the status quo.
That said, what does it mean to become an entrepreneur, and how can you make an impact in this role? First, of course, you’ll need to do the research and create a website to share your ideas with the world. Then, you’ll need to implement that idea - using a special set of skills and a healthy dose of grit and determination. Our comprehensive guide will explain what you need in order to succeed and provide you with knowledge for getting started.
What is entrepreneurship?
Entrepreneurship is the act of starting a business in the hope of earning a profit. However, our modern perception of entrepreneurship has evolved into recognizing its ability to solve large-scale problems and influence social change.
Entrepreneurship also plays an important role in the economic development of our vibrant marketplace. It leads to better standards of living and generates new wealth, as well as increased employment and national income.
With technological advancements and market demand for new business ideas and innovation, the practice of entrepreneurship is growing rapidly. Today, more and more self-motivated individuals are looking to become fully independent in their professional lives and are aspiring to create their own future.
How entrepreneurship works
In addition to understanding the personal benefits of entrepreneurship, it’s important to see how entrepreneurship works on a larger scale, including its impact on the economy.
Economists typically categorize entrepreneurship as a factor of production, thus giving it significant socioeconomic value along the lines of natural resources, labor and capital. In fact, a key part of any business plan template involves specifying the labor, resources and capital needed to produce a good or service.
In most cases, you won’t only need physical resources, but you’ll also need to hire a skilled workforce to keep the business running. With this in mind, entrepreneurs are known to be an irreplaceable source of growth and development.
Types of entrepreneurship
So far, we learned that entrepreneurship is an opportunity for folks in search of profit to do something in a meaningful way. Just as there is no one kind of entrepreneur to represent them all, there is also no definitive type of entrepreneurship.
With a variety to choose from, including small business, scalable startup, large company and social entrepreneurship, it’s important to focus on the differences that make up each one in order to gain a deeper understanding of the entrepreneur you want to become.
4 types of entrepreneurship
Small business entrepreneurship
Scalable startup entrepreneurship
Large company entrepreneurship
01. Small businesses entrepreneurship
Small business entrepreneurship is the process of someone starting a business and not planning on franchising or turning it into a large corporation. In my personal experience, the best examples of small business entrepreneurship are local establishments that I cannot fathom living without, including Katz’s Delicatessen for pastrami on rye, Peter Luger for celebratory meals and Three Lives & Company where I can resupply my home library with weekend reads.
Just looking at the multifaceted infrastructure of this type of entrepreneurship shows us that small businesses are an extension of the dreams and desires of entrepreneurs themselves. From the restauranter and book seller, to the fitness instructor down your block, these are people whose passions and skills serve their customers to the fullest extent on a small scale.
Furthermore, while a small business owner may take out a loan or receive some financial backing down the line, they will be primarily bootstrapping their venture until it can eventually sustain itself. This ethos of independence distinguishes small business entrepreneurship from the rest.
02. Scalable startup entrepreneurship
Scalable startups set out to make changes in the world vis-a-vis innovation. This type of entrepreneurship can be defined as a business model in which a group of individuals is guided by a unique business idea. Silicon Valley is the living embodiment of that practice.
Though they begin small, successful startups expand rapidly and generate big profits, including Google, Wix and Airbnb. These types of companies often require outside investors and more capital in order to scale and break into different global markets.
03. Large company entrepreneurship
Large company entrepreneurship refers to companies that have a finite life cycle. They can grow and sustain by creating new products or offering other services around their main target markets. For example, a jeans manufacturer may decide to start selling denim backpacks, hats and even sneakers, as they already have the production process in place to do so.
This type of entrepreneurship is based on creating new opportunities that help expand an existing company’s reach and stay competitive. In other words, they are different from all the other business models on this list because they do not rely on opening an entirely new venture. Rather, their motivation to reinvent themselves may come from outside pressure to evolve or technological advancements that have rendered them obsolete.
04. Social entrepreneurship
Social entrepreneurs focus on creating products or services that benefit society. They work for the betterment of our world, and keep this mission at the front of mind even while sustaining a profitable business.
There has been a recent surge of media attention on social entrepreneurship. Some of the best known examples include companies like Seventh Generation and Toms Shoes. There’s genuine public interest in learning about business-minded folks who are willing to take on risk and put so much effort into improving our lives.
Social entrepreneurship is here to stay. Just like businesses, social entrepreneurship has become an integral part of our lives. “What business entrepreneurs are to the economy, social entrepreneurs are to social change. They are the driven, creative individuals who question the status quo, exploit new opportunities, refuse to give up, and remake the world for the better,” writes journalist David Bornstein.
Why should you become an entrepreneur?
Entrepreneurship is risky, but it’s also rewarding. Becoming an entrepreneur means that you will constantly learn, grow and evolve. Even when you face challenges, it’s important that you continue to persist and stay true to your values.
While not everyone has what it takes to open and run a business, if you are self-motivated, creative, resourceful and undeterred, then you’re ready to reap the benefits of entrepreneurship. Here just some of the advantages of pursuing this career path:
Being your own boss
When you are your own boss, you gain complete autonomy. You have the unique opportunity to call all the shots and decide how you work. Entrepreneurship also lets you pick and choose the aspects of running a business that bring you the most pleasure. Then, you can simply outsource certain tasks to others and focus on the areas of the business that matter to you most.
Having a flexible schedule
Many people are drawn to the idea of entrepreneurship because it liberates them from the confines of nine to five and two-week vacations per year. That said, remember that running a business means you’re going to work really hard and face long hours. Luckily, as an entrepreneur, you can control the workflow, manage your own time, and determine your own workplace - whether it’s at home or in an office.
Creating a career aligned with your values
What makes you thrive? Your answer will help you identify what the perfect job looks like for you. From your company culture and mission statement to the types of employees you bring onboard, you can prioritize your values in everything tied to your business.
Becoming a problem-solver
At its core, entrepreneurship is about taking risks and working hard in the name of solving problems. As an entrepreneur, you’ll learn how to be a critical thinker and focus on coming up with unique solutions as an agent of change. Using your creativity, you’ll also be able to improve upon existing services or products and better address the public’s needs.
How to become an entrepreneur
Now that you know the reasons why entrepreneurship is appealing to so many, the next stage is to learn how to become an entrepreneur. Here are 5 essential steps:
Be financially secure
Do your research
Choose an issue you’re passionate about
Create a solution
Build your network
01. Be financially secure
Before you launch a business, you’ll want to have enough financing set aside to cover your company expenses for at least the first year, or until you see profit. That way, you can focus on more important stuff like creating a sustainable business model, instead of how to generate fast cash.
Knowing your finances will also help you determine the best way to stay on track with your business goals. While you may be tempted to spend big on your great ideas, you’ve got to be careful about how you spend your money during this early phase. Purchase only what you absolutely need to get your business off the ground, and budget wherever you can. This will help extend your financial savings and make life as an entrepreneur a little smoother.
02. Do your research
Nearly every school-aged child has learned the motto “knowledge is power.” As an aspiring entrepreneur, the more information you have about your industry, the more persuasive you will become.
Take time to research and familiarize yourself with your target market by reading books, perusing blog articles and browsing other entrepreneurs’ websites. You’ll want to consume content that gives you a fresh perspective on your business and keep your finger on the pulse.
03. Choose an issue you’re passionate about
Entrepreneurship is fueled by innovation and new ideas. While you may feel like you’ve got an infinite number of good business ideas, you should prioritize them based on what you feel most passionate about. This will drive you to become a better entrepreneur since you’ll be working toward something you love.
04. Create a solution
Once you know what you want to dedicate yourself to, you’ll be able to come up with a unique solution that’ll bring value to your target audience. This can also help you develop your thought leadership within your industry.
For example, if you are inspired by solving climate change, you can open a business that sells plant-based and lab-grown meats. This could help change the habits of meat eaters and encourage people to shift their diets to lower-emission alternatives.
05. Build your network
Even though you may feel like the process of becoming an entrepreneur is solitary, it doesn’t have to be. In fact, you’ll want to reach out to other professionals in your field as soon as you define an idea to get their insights. Consider attending networking conferences, speaking events by fellow entrepreneurs and finding a mentor in your industry to guide and inspire you throughout the journey.